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Limited Liability Company Additional Information

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Benefits of a Limited Liability Company

One "benefit" for current S-Corporations considering LLC status is that members who work for the LLC are not bound by the S-Corp requirement of paying "reasonable compensation for serices rendered the corporation". Instead they pay these members gauranteed payments subject to the Organization Agreement. This relieves them of the payroll tax burden that many small S-Corps are struggling with.

LLC Conversions

For information on the conversion of a single member LLC to a multiple member LLC, see Rev. Rul. 99-5.

For information on the conversion of a multiple member LLC to a single member LLC, see Rev. Rul. 99-6.

Requirements for Federal ID Number

If you are the sole owner of the LLC and the LLC has no employees, then there is not a need for a separate Federal Tax ID number for the LLC.

If you are the sole owner of the LLC and the LLC has employees, you will need to get a separate Federal Tax ID number, if you choose to have the LLC report and pay employment taxes with respect to employees of the LLC.

If you are not the sole owner of the LLC, you will need a separate Federal Tax ID number for the LLC. See Notice 99-6, 1999-1 CB 321, contained in IRB 99-3.

References:

Discussions concerning LLCs (updated only through January, 2007 - please consult Category:LLC for more recent and possibly more relevant discussions)

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